The Fair Pay Agreements Bill has been introduced by the Government, but Retail NZ chief executive Greg Harford believes the "whole bill is fundamentally flawed".
The bill would provide a framework for collective bargaining for fair pay agreements across entire industries or occupations, rather than just between unions and particular employers.
On Thursday, Harford told AM this may work for some sectors but it won't work for retail.
"It effectively creates a one size fits all approach to industrial relations across the whole economy."
He added that having to bargain for better work conditions will most likely create unnecessary stress for both employers and employees.
"Don't create an adversarial system that will see employer associations trying to negotiate with trade unions in a process that can potentially drag on and be extraordinarily difficult."
He said it also made it difficult as businesses won't be part of the negotiation process.
"The businesses don't even need to know about it or be told about the negotiation process, yet they're going to end up with legally binding rules in place that they need to adhere to or face potentially quite significant fines and prosecutions."
Harford told AM as wages go up for employees in the retail sector, so too will the prices of what people will everything else.
"There's a whole range of ways this could hit Kiwis in the pocket, both through the cost of services and the cost of goods," he said.
"It's also going to drive higher prices more generally for food and clothes and anything else that we're buying."
Workplace Relations and Safety Minister Michael Wood has said fair pay agreements will create better working conditions and improve productivity.
"We can actually become a more productive economy if we shift the focus of our economy from competing on the basis of low wages to competing on the basis of better products and services," he said earlier this year.
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